Every Man's Greed
Yesterday was Earth Day - an annual event demonstrating support for the protection of nature. My personal reflections focused on the global economy and outlook as nations slowly recover from the shock of the Covid pandemic.
As we enter the second quarter of 2021 the world economic outlook remains highly uncertain. Growth, projected at 6 per cent this year, moderating to 4.4 per cent in 2022, reflects the extra fiscal support to business in a few large economies, an anticipated vaccine-powered recovery in the second half of this year, and the continuing adaptation of economic activity to restrained international travel and mobility. Much still depends on the path of the SARS-CoV-2 pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.
While this is hardly a surprise after the havoc caused by the pandemic to global supply chains and trade, it is also entirely predictable. Since the financial crash of 2008 we have ignored all opportunities for fiscal reform, carrying on with business-as-usual as though nothing needs to change. Yet conditions are far worse now than they were in 2008. And while our knowledge is greater, wisdom still eludes us. Institutional and individual greed is as rampant as before. Yet none of the fundamentals of the global economy have been modified.
The principal driver of the industrial economy - a relentless cycle of desire and consumption, stimulated by a quest for productive growth with energy generated from coal, oil and gas - shows few signs of abating. We are addicted to materialism, yearning for more and more stuff in the hope it will make us happy. Governments fixate on delivering a surplus even as their economies stagnate. But personal anxieties only seem to deepen.
Meanwhile the real impacts from global heating, together with government dithering, have yet to be factored into our consumer-driven society. As we remain on track to exceed 2.0° Celsius, various pledges made to reduce emissions at the Climate Conference in Paris in 2015 have become empty promises that need rebooting in Glasgow later this year. Other than that what more could possibly go wrong?
Neoliberal orthodoxy suggests we simply ride out the current cycle, as there is no other recourse. This is how a modern economy works, so we had better get used to it. But with economic populism and protectionism on the rise, and further talk about de-globalization, it is surely timely to re-evaluate this framework - particularly in terms of how it might be tuned to narrow the gap between the ultra-wealthy and the poor, so as to meet the needs of the human family more effectively.
It is also time to broaden our comprehension beyond the field of conventional economics. In so doing we should aim to situate the global economy as one critical element in a much larger socio-political structure, whose role is to both define and validate a higher moral purpose.
But wait. This is an obstacle in itself. The utopian imagination seems to be trapped, along with capitalism and industrialism, in a one-way future consisting only of growth, growth, and more growth. The rise of libertarianism too, the dogma of private ownership (accompanied by the erosion of public ownership) and the role of the banking industry in the monetocracy, all play into the hands of an impending catastrophe. And capitalism, as it is now observed, is at the heart of this crisis.
If we are bold enough to evaluate the global economy from the perspective of social impact, tracing the evolutionary path of economic orthodoxy over the past two centuries, we arrive at an alarming conclusion. The two most fundamental pillars of capitalism are culpable for most of the economic volatility we are encountering today. This is likely to get worse if appropriate remedies are not taken. Remove these constraints, however, and it becomes hypothetically possible to avoid many of today's most irksome socio-economic problems. But it also means facing up to two troublesome truths:
1. The Illusion of Unlimited Growth
The promise of endless economic growth is sheer fantasy. Moreover this particular fantasy is turning into a nightmare - increasingly incompatible with the need to tackle various 'exterior' crises facing human civilization (such as the collapse of our most life-critical ecosystems, and the ingrained graft and corruption to be found in almost every country today) in addition to an 'interior' crisis of consciousness, which allows the endless quest of ramping up manufactures to persist in precipitating and sustaining a pandemic of anxiety, depression and addiction.
Regrettably the proposition that growth can be decoupled from material consumption is also absurd. We know from recent research that once a certain point is reached, the benefits of economic growth start to level off in terms of mortality, nutrition, education, health and even happiness. But if growth no longer offers the benefits it once did, and is actually becoming a cancer on society instead, viable alternatives should be found and tested.
The first step, it seems to me, is to adopt the principles of a circular economy so that far less waste is produced and people are encouraged to spend less on stuff they do not need. The second step, undertaken in parallel, must be to ensure that economic growth is modified to local conditions rather than being blindly accepted as a universal objective.
Given that energy from resources is used to manufacture the goods and services we all use, one key measure should probably relate to energy consumption. Iceland, for example, uses around 763 gigajoules of energy per capita annually while South Koreans consume around 220 gigajoules. In truth, far less growth is needed, or desirable, in nations like these than in Nigeria (30 gigajoules), Cambodia (16 gigajoules) or Bangladesh (9 gigajoules) for example. Yet governments of all persuasions constantly crave higher and higher levels of growth.
The progressively malignant effects of growth-based societal development have created a clear need to look at some different options. These would have to replace the persistent accumulation of money, and the pursuit of growth at any cost, which is at the core of today's neoliberal philosophy.
One possibility, often canvassed, is a post-growth world-system that puts health, vitality and well-being - including everything required to sustain these - at the centre of human activity. Only when public outrage forces governments to balance parochial sufficiency with the needs of humanity as a whole will that kind of bold strategy be embraced. This problem is usually ignored or treated as an inevitable consequence of the way we choose to exist and interact.
The notion that continuous unfettered growth is unnecessary is a tough nut to crack. Requiring almost a spiritual conversion to accommodate such heresy, classically-trained economists still dismiss such an idea as being either irresponsible, unworkable, or impossible. Even modern monetary theory fails to deal with this problem adequately.
If changing our beliefs about growth are fraught, acknowledging the validity of my second truth is perhaps even harder.
2. The Evil of Avoidable Inequality
Boosted by technological innovation and private sector investment, laissez faire capitalism brought untold wealth to many nations, dragging social progress in its wake. But it has since led to discrimination and injustice on a massive scale. In spite of this we still cling limpet-like to the aim of being wealthier tomorrow, at least in a material sense, than we were yesterday.
The origins of inequality can be traced back to private ownership, which began to take root and flourish in Europe during the late 15th century and rapidly spread across the world. Land previously publicly owned began to be divided up into privately owned assets. This generated a system of socio-economic stratification that benefitted owners over operatives.
It is beyond belief that the way we organize and manage the global economy continues to be based on money rather than merit. There is no evidence to suggest those who possess wealth are more ingenious, smarter, or deserving than the rest of us. In any scheme separating those who own the means of production, from those employed purely for their labour, is bound to guarantee inequality. As a consequence, the wealth generated in our society is increasingly and unfairly concentrated among a privileged few - a majority of these in the most developed nations.
This concentration means the 26 wealthiest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the human population. The net worth of Jeff Bezos, the owner of Amazon and the world's richest man, at around $195.8 billion, is greater than the GDP of Qatar, a country rich in oil and natural gas resources, and exceeds the GDP of Iceland, Luxembourg, and Sri Lanka combined. Meanwhile tax systems that put a high burden on the underprivileged mean public services are underfunded, stretching the gap between rich and poor while fueling public anger still further.
Extreme inequality of income and wealth is not good for anyone. The consolidation of wealth and capital in so few hands is economically inefficient and socially disruptive.
There is no doubt that growing inequality is one of the biggest challenges the world is facing. Solutions might ultimately depend on the contraction of economies in the developed world, downscaling both production and consumption globally. We also need to consider putting a cap on the accumulation of individual wealth, which is happening in China, and regulating corporate pay and rewards, while optimizing happiness, health and well-being through various non-consumptive means.
There is sufficient slack in all developed economies to pursue such a path. The pandemic has shown that cutting back on the manufacture of material goods does not mean the end of the world. Consuming less, while devoting more time to art, music, family, nature, culture and community, does not seem too bad a deal to me - particularly if it means reducing the stress on human-made systems and natural ecosystems never intended to cope with the demands of 7.84 billion people.
Unsurprisingly people are angry about inequality and unfairness when they see an ever-larger slice of the cake going to the rich, while the poor are expected to survive an age of austerity in the best way they can. Opening our minds to reinventing the global monetocracy from first principles, will not delight everyone of course. As Mahatma Gandhi said: Earth provides enough to satisfy every man's need, but not every man's greed.